Preface to the 2006 Edition

It's been 16 years since I wrote the original Value Averaging (1991) and 14 years since the revised edition (1993) came out. The classic edition being republished is the 1993 edition. The intervening period has been anything but boring for investors. As the markets alternated between exciting and exasperating, fortunes were made and lost and made again.

As we roll the clock forward from the original book, let's take a look at modern markets and value averaging to see whether the strategy is as strong today as it was then. First, let's get a historical perspective by comparing the market of the past decade (1996–2005) to similar market action from 70 years earlier (1926–1935). While you probably weren't around for that earlier period of our history, you're likely aware of the market insanity of the 1920s and 1930s, with the speculative bubble of the Roaring Twenties, the Great Crash of 1929, the unprecedented draw down of market wealth that occurred over the succeeding few years, and the Great Depression of the 1930s. In the graph in Figure P-1, this wild historical decade is contrasted to the current decade (since 1995), exactly 70 years apart, but scaled to the same starting point. It's an interesting comparison, as the early gentle run-up, the spike skyward, the crash and near-immediate rebound, the more painful and extensive second crash, and the steady climb out of the gutter after about three years, bear an uncanny resemblance across 70 years of ...

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